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Deploying lawyers and the risks of cherry picking

When faced with allegations of complicity in human rights violations, one option for corporates is to deploy lawyers to challenge the allegations. Not only in a regular court, but in the (cliché alert) court of public opinion. Two recent examples are illustrative and interesting.

G4S has faced criticisms in various fora in relation to its business dealings in Israel, in particular its provision of equipment and services to: the separation wall in the West Bank; a crossing to the Gaza strip; and the Israeli prison system. In June 2014, G4S published the findings of “two independent reports”: a “human rights review” conducted by Dr Hugo Sim; and a “legal opinion” written by Professor Guglielmo Verdirame. Dr Sim concluded that G4S did not have a “direct” role in the alleged abuses and said that G4S’s critics had confused “proximity” with “complicity”. According to Professor Verdirame, allegations that G4S had breached international human rights law and/or international humanitarian law were “manifestly unfounded”. G4S published a summary of the reports on its website and pointed to these findings in its AGM. G4S also relied on these findings when responding to a complaint lodged with the UK’s National Contact Point for the OECD Guidelines for Multinational Enterprises – more on which below.

SOCO International has been accused of links to bribery, corruption and a “climate of violence” in eastern Congo, where it had permission to explore for oil in and around the Virunga national park. Some of the allegations were the subject of a recent film. In June 2015, SOCO announced the results of an “independent review” of allegations of wrongdoing in the DRC. Clifford Chance LLP concluded that certain allegations were “substantially inaccurate”. According to one press report, having had access to around 100,000 documents and permission to interview any SOCO employees, Clifford Chance found:

no evidence to support allegations that SOCO or its employees sought to promote, sponsor or support any intimidatory actions against any individuals or groups in the DRC.

On the one hand, it is good to see corporates engage with critics and the issues in a serious and apparently rigorous way. On the other hand, critics might question the independence of such exercises. Satellite debates can mushroom over the parameters and merits of the lawyers’ work. This is an interesting and important debate. One which will be reignited in future cases , should corporates seek reassurance behind a lawyer’s CV or a law firm’s logo. But the rest of this post focuses on a potentially problematic legal issue that arises, if it could be said that a company cherry picks advice to suit itself.

The cherry picking rule

Can I offer you some legal advice? (Credit: Igal Kleiner under Creative Commons)

The cherry picking rule, otherwise known as collateral waiver of privilege, prevents a party presenting a partial view to an English court by relying on “good” legal advice without disclosing any “bad” or “harmful” advice. If the “good” bits are relied upon to advance a party’s case, English law requires a party to disclose otherwise privileged material that goes to the same issue. The risk of waiving privilege over more than you wanted gives reason to gulp and pause before deciding to disclose and rely on otherwise privileged stuff.

What if G4S and/or SOCO International were criticized for cherry picking the advice they disclosed? For example, could SOCO International be forced to disclose any bits of Clifford Chance’s review that led to the conclusion that the allegations were only “substantially” (apparently not 100%?) inaccurate?

Probably not. Indeed, you would expect that this is a point that corporates reflect on before publishing otherwise privileged legal work. The crucial point is that collateral waiver only arises if the privileged material is relied on in proceedings. Similarly, even if potential (but not actual) litigants exchange early letters quoting their lawyers at each other, they are not obliged to disclose everything that their lawyers have advised. The rubicon is crossed, however, when referring to the legal advice before an English court in an attempt to advance a case. If a party does more than merely refer to the fact of earlier legal advice, by deploying the advice to advance their case, then an English court would hold that fairness requires more extensive disclosure of further privileged material going to the same issue. So far, SOCO have remained on the right side of the line. But that position might change if it sought to rely on Clifford Chance’s conclusions in any future proceedings.

What about G4S? An interesting nuance here is that G4S relied on the legal opinion and human rights review when responding to a complaint made to the OECD National Contact Point. Indeed, the NCP’s Final Statement issued in March 2015 found that G4S’s (and its advisers’) focus had been too narrow – the NCP held that G4S could have used its leverage in certain (unspecified) ways to address adverse impacts referred to in the complaint. There followed a series of public exchanges between the complainants and G4S over how the NCP’s Final Statement should be interpreted. For present purposes, an interesting question is whether G4S waived privilege over the full reports and possibly any related advice going to the same issue(s)?

Again, probably not because the NCP is not a court. But this does not mean G4S has avoided all potential pitfalls. A recent decision in an unrelated area gives further reasons for corporates to gulp and pause.

Property Alliance Group v The Royal Bank of Scotland PLC [2015] EWHC 3341 (Ch) is about alleged LIBOR manipulation. The defendant bank had provided otherwise privileged documents to a regulator. The bank then sought to rely on regulatory findings when defending (related) civil claims. Birss J found that, by relying on the regulator’s finding, the bank had waived privilege over privileged material provided to its regulator – in other words the bank could not rely on the regulator’s finding without disclosing what the regulators saw. This decision is subject to appeal, and there are clear distinctions between a bank’s regulator and the OECD NCP. Nevertheless, the case highlights the dangers posed by the rules on privilege and collateral waiver.

Conclusion

From a corporate’s perspective, it can be an appropriate strategy to engage lawyers and waive privilege in order to address public criticism. But if litigation follows, caution should be exercised before referring back to positive legal advice or reviews. It does not take much to imagine a litigant putting the contents of published advice in issue in order to seek broader disclosure than a company ever envisaged.